529 Limits

Arriving on the scene a few years ago, 529 savings plans Shoulda, coulda, woulda been the greatest thing since sliced bread. There are hundreds of articles on the web and in magazines that deal with the advantages and disadvantages of 529 plans. I can not add anything to the collection of information. However ... ... ... ....

There is a unique feature of 529 plans, it is simply not right to feel.

Type "529" plan in Google. Interestingly, from today, there are 10,800,000 results for "529 plans" - but only 1,200,000 for "529" plan. Why the lack of popularity for the singular, who knows? ... I digress.

There are so many hits in Google, because each state sponsor their own plan of 529. This makes the 529 landscape blurred at best and downright confusing at worst. The investment options and fees charged by the plans of various states varies .... And if you live in a state that allows at least a partial deduction for contributions, you may need to consider using the plan sponsored by your state ... the deduction may be simply too valuable to pass up versus investing in a plan of another State may appeal to you more. In Georgia, donors are allowed to deduct up to $ 2,000 per beneficiary per year, regardless of their income (which was changed in 2007 - there was an income limit). Since the higher tax bracket in Georgia is 6%, this deduction is only $ 120 per year. The more money you contribute above the $ 2,000 threshold, the less attractive the deduction becomes (in terms of percentage of investment). In particular, if the plan of another state has more rights to appeal or investment options. Some states do not allow a tax deduction for state income, which gives the investor the opportunity to live "to the country" without any benefit lost.

To "make the country", he would need someone to care for nearly 50 different levels so each plan is limited to investments in this menu. Some menus have 5 choices .... some more. Each diet its own cost structure.

Imagine that your retirement savings into an IRA was "Georgia" which was limited to 10 investment options and was the sole provider, you can use if you want to deduct your contributions! You can not. We can I.

It is time to solve this problem. A 529 plan should be just like an IRA. You can open it with any financial institution you choose and pay as you wish. It would be so much easier and is compatible with almost all types of investment account in existence today.